Episode summary
Why the World’s Biggest Investors Are All Investing in Data Centers
How I Invest With David Weisburd
· · 51 min · Hosts: David Weisburd · Guests: Joel Holsinger
Summary
Joel Holsinger argues that the biggest edge in private credit and asset-based finance is scale. He says Ares can pursue massive data center and AI infrastructure opportunities because those assets often behave like long-duration net leases to investment-grade counterparties such as Meta, Google, and Amazon, with contractual cash flows doing much of the work. He also says the market is shifting toward a handful of firms that can write very large, flexible checks, and that credit is becoming more consolidated because the business depends on systems, infrastructure, and brand.
A major theme is that reputation compounds like capital. Holsinger says the best sourcing comes when counterparties trust that “if you say you're going to do X, you're going to do it,” and he warns that winning every negotiation can poison future relationships. He ties that to leadership: authenticity, self-reflection, shared purpose, and a culture of continuous improvement. Ares’ internal process includes lessons-learned reviews, junior ICs, open ICs, whiteboarding, and visualizing cash flows to force teams to think clearly about risk.
He closes with a broader philosophy on careers and investing: focus on patience, intellectual property value, and downside protection rather than short-term pay or titles. He says young investors should optimize for where they learn, who they learn from, and whether the work compounds their long-term value.
Key takeaways
- Holsinger says scale is now a moat in credit because only a few firms can write very large, flexible checks into data centers, energy, and infrastructure.
- He argues data centers are often more credit-like than equity-like because the economics are driven by long leases to IG-and-above counterparties.
- He says the best deal sourcing comes from reputation, not aggressiveness, because counterparties prefer firms that reliably follow through.
- Holsinger says Ares uses lessons learned, junior ICs, and whiteboarding sessions to build what he calls a “credit DNA” and accelerate judgment.
- He warns young investors not to chase salary or title at the expense of intellectual property value, because career compounding matters more over time.
Notable quotes
“It's the scale of the opportunity. What are your largest capital consumptive areas in the world? Energy, infrastructure, real estate”
“Credit's about infrastructure. If you think about the scale and the velocity of credit, whether it's direct lending, whether it's ABF, whether it's others, it's really about systems, it's about infrastructure, it's about scale”
“Your best sourcing comes from branding, which is being established and known that if you say you're going to do X, you're going to do it”
“we call it Kaizen investing with purpose. You need to have this idea”
“the thing I started doing only five years ago was what we call visualize the cash flows”
How the episode opens
Why are firms like Aries and many of your peers investing into data centers and data infrastructure?
It's the scale of the opportunity. What are your largest capital consumptive areas in the world? Energy, infrastructure, real estate.
If you think of data center by itself, what is it really? It's a net lease asset. If you own a de data center, you've built the data center, you own it now.
You're leasing it back to Meta. You're leasing it back to Google. You're leasing it back to Amazon.
In the end, what you have is actually a pretty boring investment because in the end you have a counterparty that's a IG and above counterparty that's paying you that lease payment for 15 to 20 years. And so that contractual cash on cash is what's taking care of you. And so as much as we think of these sometimes as equity related because they're development, they're really credit profile because of that structure of that lease.
In full disclosure, I'm investor and anthropic. That being said, I'm also self-aware. I realize that it's such a new market, such a fast growing market.
Whether or not you have a 15 or 20 year lease, is that not increased the risk on investment backing a cyclical trend that may or may not sustain at least at its current stage? Well, first, congrats um on being an investor in an entropic. I think that the thing we've seen is how quickly things are changing and you're right, like these are long-term assets and long-term portions.
I think the thing that is always going to be true is that computing power, that ability to have that computing power and that ability to drive that. We've seen this with cloud. We're on our third iteration of what a data center is today.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private credit scale
- data centers and ai infrastructure
- downside protection
- investor reputation
- team leadership and kaizen
Companies and tickers mentioned
- ARES
- FIG
- Ares Alternative Credit
- Ares Management
- Fortress Investment Group
- Atalaya Capital Management
- Ares Pathfinder funds
- PATH Global Health
- AlphaSense
- Promote Giving
- Weisburd Pierce
Watch the episode
Watch “Why the World’s Biggest Investors Are All Investing in Data Centers” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
